When John Fry became president of Drexel University in 2010, he inherited a medical school that was hobbled by its relationship with Hahnemann Hospital, where aspiring doctors got hands-on training.

Serving mostly poor Philadelphians, the historic facility was struggling financially. Important maintenance kept on being put off, he said, and there was only “passive interest” from the hospital’s for-profit owner, Tenet Healthcare Corp.

“We wanted a first-rate place to educate our students and treat our patients," Fry said in an interview Thursday, "and we never had that.”

He said he had been exploring an exit strategy for years, and was focusing on what to do when the university’s agreement with the current owner expired in 2022.

Those plans were thrown into overdrive last month with the stunning announcement that the 171-year-old Hahnemann was closing its doors leaving workers, patients, residents — and Drexel’s College of Medicine and its physicians’ practice program — in a lurch.

It was “a crisis thrown on our doorstep,” said Tom Kline, a senior member of Drexel’s board of trustees, whose name is on the university’s law school.

Drexel announced that 40 percent of university physicians and clinical staff will lose their jobs as a result of the planned hospital closure. Medical school students who were based at Hahnemann were moved to other locations. The closure also means upheaval for the hospital’s 500-plus resident physicians, mainly graduates of other medical schools, who are employed by the hospital but largely supervised by Drexel medical faculty.

“What we were faced with as a university was a notification that ‘we’re closing our doors’ and that became enormously disruptive for the lives of everyone,” Kline said.

Beyond the logistics crisis, there also is a potential reputation hit. In addition to repeated demonstrations by angry workers and community members, Hahnemann’s closure drew national attention, with presidential candidate Sen. Bernie Sanders using it as a backdrop to campaign for his Medicare for All Plan.

Fry, Kline, and other Drexel officials spoke publicly for the first time Thursday about the situation in an hour-long interview with The Inquirer, downplaying the negatives and stressing that the medical school, a part of Drexel for 21 years, will come through stronger.

Though Drexel is losing its Philadelphia teaching hospital, they insisted the medical college will thrive with its new partner, Tower Health Medical Group, and its main facility, Reading Hospital.

Though Reading is more than an hour away — and lacks some of the accredited resident programs that Hahnemann could offer — university officials said the 700-plus-bed hospital is bigger and more modern than Hahnemann.

“This medical school is going to be just fine," said Valerie Weber, senior vice dean of academic affairs for the medical college. "It’s an inflection point for us, a pretty big one, but you just have to take the long view in situations like this.”

Deteriorating finances

Joel Freedman, a California investment banker and chief executive of American Academic Health System, paid Tenet $170 million to buy Hahnemann and St. Christopher’s Hospital for Children and the real estate in 2018. Hahnemann was hobbled by greater-than-expected losses and financial disputes from the start, according to bankruptcy documents filed on the heels of the closure announcement. Hahnemann’s total pre-tax losses last year were $69 million.

Drexel felt the pain. Hahnemann started missing its payments for Drexel physicians to supervise the medical residents, and now owes the school $14 million — which Fry says he doubts he can recover.

“That’s obviously going to be very painful for us,” he said.

Drexel University President John Fry in an April 11, 2019 file photo.
ELIZABETH ROBERTSON / Staff Photographer
Drexel University President John Fry in an April 11, 2019 file photo.

As of Friday, just 30 patients were left at the 496-bed hospital, which Freedman said was losing up to $5 million a month when he filed for bankruptcy in June. It is scheduled to shut entirely in September.

American Academic offered Drexel the chance to take over ownership of Hahnemann and St. Christopher’s for a nominal sum, according to a bankruptcy court filing.

Drexel considered the offer but declined.

“It wasn’t much of a deal,” Fry said, an entrepreneurial president who was the chief architect of the neighborhood transformation around the University of Pennsylvania under former president Judith Rodin and paved the way for major development in Lancaster as president of Franklin & Marshall College.

The university would have had to take on $300 million in liabilities, which wasn’t feasible, Fry said.

“Would we have been interested in doing that if it were economically viable? Absolutely,” Fry said.

A 21-year history

In 1998, Drexel took over the management of Hahnemann’s medical school after it was shed by Allegheny University Hospitals in the largest nonprofit health-care bankruptcy in the country to that point. Drexel wasn’t exactly eager for the job, accepting it only when Allegheny’s creditors offered a $50 million endowed gift.

In 2002, the university took permanent control of the medical school, which continued to operate as a separate nonprofit under Drexel until 2014, when it was incorporated within the university.

“That’s how strongly we felt the college of medicine should be at the heart of what we do,” Fry said.

In 2016, Tenet indicated it wanted to sell the hospital, which accelerated Drexel’s search for a new partner, Fry said. (Tenet declined comment.)

“We met with the people at Reading Hospital, who were in the process of constructing Tower Health,” he said of the system created with the 2017 purchase of five hospitals from Community Health Systems. Reading Hospital is the flagship of Tower Health, which also includes Brandywine Hospital in Coatesville; Chestnut Hill Hospital in Philadelphia; Jennersville Hospital in West Grove; Phoenixville, and Pottstown Hospitals.

Drexel agreed to open a secondary medical school campus in West Reading, which began construction last month.

Meanwhile, last fall, the university began planning to merge physician practice plans with Tower on Jan. 1, 2020, said Jill Tillman, CEO and associate dean of Drexel University Physicians. Hahnemann’s closure also accelerated those plans.

A new primary partner

Reading Hospital, run by Tower, will replace Hahnemann as Drexel’s primary academic partner. It has among the most emergency-room visits in the state and by some measures performs better than hospitals in Philadelphia, Drexel officials said.

The Leapfrog Group, which represents large employers and purchasers of health care, gave Reading Hospital an “A” grade for patient safety in its most recent evaluation – a composite score based on data from the government and the hospitals being rated.

Yet the hospital fell short on several indicators that are part of that overall rating, scoring worse than average on its rates of dangerous blood clots, bloodstream infections, surgical wounds that split open, and patient falls and injuries. And in a new supplemental report this month on certain high-risk surgeries, Leapfrog deemed that for several types of procedures, Reading’s doctors and nurses may not be getting enough patients to keep up their skills.

Fry downplayed the potential drawbacks of losing the volume and diversity of cases that a big-city facility might attract. Just 65 miles from Philadelphia, Reading, he said, is a diverse city with a high degree of medical need that will offer students a different kind of experience.

“We’ve reconceived of the Drexel College of Medicine as Philadelphia- and Reading-based, a two-campus enterprise,” he said. “It gives us a terrific new dimension.”

Impact on the college

At Drexel’s main medical college campus on Queen Lane this week, employees and students were reluctant to talk about the hospital’s closure.

“Everyone’s just confused about what’s going to happen to us,” said Aishwarya Suresh, 22, a medical school student from Syracuse, N.Y. “It’s just a very uncertain time.”

Drexel said Thursday that Queen Lane faculty and staff are not affected by the announced job losses.

Drexel’s medical college, the fifth-largest in the country, enrolls nearly 1,900 students, 1,043 of them medical school students and the rest graduate students. Just about every medical student goes to Hahnemann for some kind of experience, Weber said. About 30 percent of third- and fourth-year students do clinical rotations there, she said.

As Hahnemann began shutting down services this month, the college removed students who were based there and sent them to other partner hospitals, Weber said.

“We were concerned about the educational experience,” she said.

University officials don’t expect the college to suffer in terms of admissions. Medical school is very hard to get into, with thousands more applicants than there are slots. And Drexel is no exception. It receives about 15,000 applications annually for 260 spots.

But the news about Hahnemann could hurt the school’s U.S. News & World Report rankings, which are in part based on reputation and perception. The magazine asks medical and osteopathic school deans, deans of academic affairs, heads of internal medicine, or directors of admissions and residency directors to rank schools in a process some think is flawed, but which still carries heft.

Drexel’s medical college this year ranked 84 out of 120 in research and lower still in primary care. The University of Pennsylvania, by comparison, ranked third in research; Thomas Jefferson, 56; and Temple, 60.

As for funding from the National Institutes of Health, another measure of research programs, Drexel scholars received $40 million for fiscal 2018. That is less than one-tenth of the $511 million allotted to Penn, though not far below the $65 million at Jefferson.

The medical college will welcome a new dean next month, Charles Cairns, currently dean of the College of Medicine and Health Sciences at the United Arab Emirates University in Abu Dhabi.

How Drexel makes the transition from Hahnemann to Tower will dictate the impact on the medical college, said Janis Orlowski, chief health-care officer for the Association of American Medical Colleges.

“Good pre-medical school students will look carefully at how Drexel and Tower work to resolve the issue,” she said. “It will be up to Chuck [Cairns] and his faculty to deal with how they put together a very strong clinical program, continue to meet their accreditation standards, and convince the good students who in the past have come to Drexel that, though there was a crisis, they are back on solid ground.”

Staff writers Tom Avril, Craig McCoy, and Marie McCullough contributed to this report.

AT A GLANCE

Drexel College of Medicine

Main campus: 2900 Queen Lane, East Falls section of Philadelphia

Enrollment: 1,891 (1,043 medical students; 870 master of science and PhD programs)

Applications: Nearly 15,000

Available spots each year: 260

Acceptance rate: 5 percent

2018 research awards: $47.5 million